China's domestic demand is beginning to cool, and the recent yuan revaluation could further slow the Asian powerhouse's investment boom, the World Bank said Tuesday.

The Washington-based lender said that although China's gross domestic product is growing briskly — it forecast output would swell 9 percent this year and 8 percent in 2006 — much of the current momentum came from abroad.

"Net of external demand, the (gross domestic product) numbers suggest that a slowdown in domestic demand is under way," the World Bank (search) said in a quarterly assessment of the Chinese economy.

"Slower credit and profit growth, lower foreign direcly positive. But it said the country faced risks from a possible slowdown in world trade.

"A two-way risk is formed by the considerable uncertainty on the extent to which domestic demand, notably investment, is slowing," it added.